The following is a transcript of the full speech given by the Vice Chief of the Defence Staff

Two weeks ago was a busy week for the UK government, with the publication of three key documents. On the Monday we published our new national Security Strategy. Tuesday was the document we're here to talk about today – the Strategic Defence and Security Review. And Wednesday was the Spending Review which sets budgets for all government departments. Taken together these three documents represent three of the essential elements of strategy: the policy ambition (on Monday) the military capability (on Tuesday) and the financial resources (on Wednesday). The fourth essential element is that the three are in coherent balance (but that is not the work of a single day).

Indeed, to me, the maintenance of that coherence between policy ambition, financial resource and military capability is the art of strategy. Because coherence is not the natural state of things. The fundamental elements of strategy are more like helicopter flight – inherently unstable – needing constant recalibration. So our SDSR is a start point not a finish.

Some have accused the UK government of having conducted a somewhat rushed process. I do not hold to that. The UK Ministry of Defence has been preparing the intellectual ground work for a Defence Review certainly for the past two years – Particularly with work on Global Strategic Trends and Future Character of Conflict.

We also recognised that the military instrument of national power entered a strategic review in a difficult – or more accurately vulnerable position. I say this for 3 reasons.

First, the UK fiscal position was acute. And the government's determination to close the fiscal deficit in a single parliamentary term added to the challenge of curbing government spending.

Second, an existential threat to the UK in hard defence terms seems increasingly unlikely. The SDSR, therefore, correctly conflates defence and security for the first time. And many correctly question the relevance of some of our traditional military capabilities.

But third – and I would doubt that this is a particularly British condition – the experiences of Iraq and Afghanistan have bequeathed an immediate legacy of political caution and societal nervousness over the purposes to which the military instrument of National Power has been most recently been put.

The British are in one of our typically ambiguous mindsets where our Armed Forces have never been held – at least recently – in such high regard – but the purpose to which they have been put has never been so seriously questioned.

So, the military instrument of National Power entered our Defence Review in a vulnerable position – with many in the Whitehall village viewing it as big, dangerous, expensive, and attended by unforeseen consequences.

Given that context I believe that defence has emerged from the process remarkably well. Its resource position has been defended. Its utility to the strategic context is actively being reshaped. And the political context for its utility has significantly matured.

The review was based around the development of what we are calling the Future Force 2020. So we are working on a transformation programme to deliver a future force in a 10 year timeframe. Today I would like to talk you through the thought processes behind the Future Force.

But first, I would like to make some general points about where the SDSR leaves our relationship with the US.

As the SDSR makes explicit our relationship is 'deeply-rooted, broadly-based, strategically important and mutually supportive'.

The UK intention is to remain America's most capable and reliable ally. We recognise that we benefit a great deal from the relationship. In return we will retain the ability to operate independently or in support of the US across the full spectrum of domains and capabilities.

The partnership is a real and active one. A British Major General, Nick Carter, hands over command of RC(South) tomorrow, having led the US, UK and other multinational troops fighting the Taliban there. In Helmand we operate alongside the US Marine Corps every day and night. General Petraeus' deputy is a British Army officer. And our special forces work as closely with their American counterparts as any force in recent history.

This is not the occasion to speak on Afghanistan, but I want to make clear that the UK's commitment to the campaign was a constant theme throughout the review. The Prime Minister has made clear that the mission is vital to our national security. The commitment to the ISAF strategy is unequivocal. Every decision we took had to be Afghanistan-proofed.

There is no change at all to our presence. We will remain the second largest troop contributor, with around 9,500 troops in theatre. We will continue to send our best people to leadership positions in ISAF and our national expertise to the Helmand Provincial Reconstruction Team.

But the SDSR also looks beyond today's operations. Our analysis of future threats matches closely that of the US – no doubt a reflection of our shared perspectives and priorities. We have worked closely with the DoD during its drafting. There have even been Department of Defense officials working within our Strategy Unit – just as we have in theirs.

The relationship has been based on working extremely closely in the military, intelligence and nuclear spheres. All of that will continue and benefit from the rebalancing towards future threats. We have a long and interesting history. But we do not intend to live in it.

A striking feature of the Review for the British media and people was the much greater focus on Cyber. We announced an extra $1bn of investment in cyber across government. From a defence perspective we are working on growing the cyber skillset and mainstreaming cyber into our training, education and doctrine. We are also working with the DoD to enhance our already close operational relationship. We have set ourselves the goal of signing a UK-US Memorandum of Understanding to formalise current and future co-operation in this field.

We will continue to expand mutually beneficial relationships countering terrorism and organised crime, reducing nuclear proliferation, and preventing conflict through early intervention in failing states. Capacity building is a key tenet of the new government's approach. We are already working closely with the US in some countries in this area and now plan to do more.

In parallel with the SDSR, we have been undertaking a review of the cost-effectiveness of our nuclear deterrent. Many thought that the deterrent would be a fault line in the Coalition Government. It has not been. The review has confirmed that a continuous submarine-based system will continue to provide the most effective minimum deterrent. We will therefore proceed with the renewal of the Trident delivery system and the submarine replacement programme. Timetables are now more realistic, but that now brings is into line with US programmes and our cooperation with you is as close as ever.

Overall the Future Force will be capable of dealing with the sorts of challenges which we are likely to face together in areas of the world where we have common interests.

The main feature of the Future Force is that it is adaptable. Our National Security Council decided on this posture because of the essentially unpredictable nature of the future. With resources and the range of threats broad we decided to hedge against a range of potential outcomes. So the government asked us to produce a force able to perform across a range of tasks without focusing exclusively on either the defence of the homeland, or on expeditionary activities. I personally led the force development and testing process, so I can confidently tell you that what we produced does just that.

We tested the Future Force 2020 against seven types of operation, reflecting the range of tasks we think the UK military is most likely to have do in the future. Military judgement and analysis panels tested a range of potential force structures against different scenarios to generate the Future Force.

Firstly we looked at our ability to restore freedom of navigation in contested waters. In a globalised world dependent upon trade, disruption to shipping lanes has wide-ranging affects to a large number of countries. Our thinking assumes that the UK would want to be capable of contributing to coalition operations of this sort.

The second scenario was a stabilisation and counter insurgency operation of the sort we have become familiar with. There were two main issues which we tested here. The first was scale, where we concluded that we needed to remain capable of deploying and sustaining indefinitely a brigade sized force. The second was self-sufficiency. Although we expect to conduct this sort of operation mainly in a coalition we took the view that we needed to remain self-deploying and self-sustaining. So the Future Force delivers the enablers to avoid being a burden on others.

We also considered a similar scenario in which the UK leads a coalition which intervenes in a civil war and conducts a follow-on counter insurgency operation. With the UK in the lead, this scenario tested our logistics and command and control capabilities. The results can be seen in the Force Structure we have come out with and justified over retention of a Theatre Command Capability.

Another scenario put Weapons of Mass Effect in the hands of a non-state group, and required the rapid and precise deployment of high readiness forces, supported by strategic intelligence and rapid decision making. Here we judged that we needed to be capable of operating on a national basis as well as part of a coalition.

Fifth, we tested our ability to carry out a complex non-combatant evacuation. The UK military has performed this function most recently in Lebanon in 2006, rescuing British nationals and citizens from other allied nations as tensions increased and led to war. This scenario tests our ability to deploy rapidly to disparate parts of the world, with reach and sustainability as key issues.

The most challenging scenario was an operation to liberate an ally from an occupying state. Here we judged that we need to be capable of putting a divisional sized force in the field with substantial maritime and air support. Our multi-role brigade concept allows us to configure this sort of force for the threat it is likely to be faced with at the time. This represents the best effort of the Future Force 2020 and could operate alone or with allies.

Finally, we considered the ongoing requirement to deter the use of force against the UK. Here presence is key. So our decisions to develop a new carrier strike capability, continue with hunter-killer submarines equipped with Tomahawk missiles support this. And in the final analysis our ultimate guarantor of security is the Trident-armed submarines providing continuous at sea deterrence.

None of these scenarios specifically covered our Article V commitment to NATO, but we judge that the force structure that can deal with these scenarios can meet our NATO commitments as well.

These options demonstrate that those who have interpreted the SDSR as a step back for Britain are a long way off the mark. Britain expects to continue to play a major role in world affairs. Otherwise the government could not have justified spending 2% of our GDP on defence at a time of financial difficulty.

William Hague, the Foreign Secretary, said before this process started that there would be no 'strategic shrinkage'. The Prime Minister, in his speech to the House of Commons on the SDSR, described Britain's significant assets: "the sixth-largest economy in the world; the fourth-largest military budget; one of the biggest international aid programs; a unique set of alliances and relationships; and one of the largest global diplomatic networks. And we retain an ambition to match all of these."

The range of scenarios we have considered is indicative that we will remain a first-rate military power, capable of conducting a full-spectrum of operations.

The scenarios range from a significant deployment of tens of thousands of troops, supported by the most modern maritime and air capabilities; to an extremely precise deployment of a small number of our world-class Special Forces.

We have tested our ability to lead a large coalition, to act in support of an ally or multinational organisation, and to deploy alone in the most challenging circumstance.

We have tested capabilities from the deployment of sheer 'boots-on-the-ground' to the covert deployment of cutting-edge technologies.

Across all of these areas we are confident that the Future Force 2020 will provide the UK with the military required to face the threats of the 21st century.

It is worth dwelling on this question of a 21st Century military. It would be dishonest to pretend that the SDSR process was the painless formulation of a future strategic vision. The Defence budget has decreased, and there have been cuts. So we cannot do everything. Some platforms have seen big reductions and a few have been cancelled. We are reducing the number of tanks in our inventory by 40%. And the Nimrod maritime patrol aircraft is being cancelled.

These were difficult decisions, but in the context of budgetary challenges and changing threats, it has been necessary to procure only equipment which is absolutely for 21st Century Conflicts. Armour and artillery are less relevant today than they were 25 years ago. But because we cannot be sure they will not be needed we have decided to maintain some capability and be ready to regenerate should the future require it. And the Nimrod was part of a suite of anti-submarine capabilities and an expensive one at that. We judge that the risk is manageable given that we will have next-generation frigates, submarines and helicopters.

It was against this background that one of the most difficult decisions was taken. Anyone following the SDSR will have seen that we had a major debate about Carrier Strike. Contractually we were heavily committed to buying two Queen Elizabeth-class aircraft carriers which we intended to equip with STOVL JSF. But shaping the Navy around two routinely operational carriers could not produce a balanced force. In the short term, basing for the sorts of operations we are likely to conduct is not a major concern. And the commitment to Afghanistan means that we are unlikely to mount a Carrier Task Group operation in the near term.

So we took the decision to commit to one operational carrier and keep the other at extended readiness. We have also decided to buy the Carrier Variant JSF which enables future operational co-operation with the US Navy and the French. And our judgement on basing in the short term means that we are taking HMS Ark Royal and the Harrier fleet out of service before the new carriers and JSF come in. Some have said this looks odd, which in some ways it does. But Future Force 2020 needs to look beyond the next few years and set us on a sustainable footing to be ready to do the full range of operations. The Carrier Strike decision means that we will have the next generation of ships and jets in service for the long term at the expense of older, less capable platforms which we judge we are not likely to need in the short term. And importantly we retain the ability for further regeneration of capability.

Regeneration and modernisation are recurring themes. What we have done with this review, is taken significant steps away from a force structure dominated by Cold-War capabilities for Cold War threats. Over next 10 years, we will be bringing in new capabilities and platforms across our armed services. The Future Force is based on next generation equipment. We are not replacing like for like. The fleet of fast jets will be smaller, particularly until the Joint Strike Fighter comes into service. But when it does we will have a very capable combination of Typhoon and F-35. We are going ahead with programmes to buy the strategic lift, air to air refuelling and helicopter capabilities that we need now, and which maintain our global reach. It is easy to overlook these sorts of platforms, which is why many nations have ageing fleets. We recognise that we need to invest in enablers if we want to be capable of acting around the globe, alone if necessary and as a credible major player in coalition operations.

Type 45 frigates, Queen Elizabeth-class aircraft carrier, Astute submarines all represent a much more capable set of maritime platforms. The Royal Navy is not standing still. It will continue to commit to the range of tasks it does today, but with a more capable set of forces. The Army has enjoyed a revolution in capability as we have equipped it to fight the war in Afghanistan. We will retain the two specialist high readiness brigades – 16 Air Assault and 3 Commando Brigades. We are investing more in enablers for our Special Forces Group to ensure that they remain self-deploying, supporting and sustaining. And despite pressure to cut back, we will remain capable of re-roling to produce land forces for the full range of combat missions.

All of this means that the Future Force 2020 will be leaner, meaner, but will be able to carry out the full range of missions required.

By way of conclusion I want to go back to where I started and make two points.

The first is that strategy is about sustaining the coherence of policy ambition, resources and capabilities. And we will not have got the 2020 force structure absolutely right. By 2015 the world will look different; Afghanistan may be resolved: the fiscal position, we hope, will be better. And in 2015 we will conduct another SDSR and a further recalibration of strategy will take place. I say this because one of the big lessons of our SDSR is that it is a mistake to leave them too long. The context moves too quickly and strategy needs active management.

My second point relates to the context I described at the outset. And particularly that element of context which relates to political caution and societal nervousness over the use of the military instrument. Please do not read into that a judgement that our government lacks conviction or our society lacks what we call 'bottle'.

It is very clear from our SDSR outcome that our government wants to be proactive in helping to shape a more stable world. It sees the military instrument as an essential element of this, working within a comprehensive approach and with international partners.

But I am confident that I can tell Americans, from a societal and political perspective, a feature of the SDSR with which you should be reassured is that the UK government has no intention of misusing its Armed Forces. It will, as a priority, seek to help to stabilise the world, to prevent and contain conflict. And to use all elements of national power and international partners to shape and maintain a more stable world. Whilst - of course- recognising that, ultimately, circumstances may arise when the resort to the legal use of lethal force is a national necessity. But the scrutiny which attends the commitment to lethal force will be very rigorous indeed. And appropriately so.

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